Negotiating a settlement

You've been injured and you believe it was someone else's fault. You've seen
a solicitor and they agree. After evaluating your case and assembling the
necessary information, they send a letter of claim to the defendant.

Now what?

Under the Pre-Action Protocol for Personal Injury Claims, the defendant has a
period of time (usually three months) to review his/her legal position. At the
end of this period, your solicitor will probably begin some form of dialogue
with him/her.

There are significant cost incentives to negotiate a settlement before going
to court. If one party unreasonably refuses to negotiate, the judge will take
that behaviour into account in assessing costs, an uncooperative party runs the
risk of facing a larger bill for the other side's costs if they ultimately lose
in court and adverse costs rulings in interim court proceedings prior to trial.

In every case, litigation should be viewed as the option of last resort for
the resolution of legal disputes.

Beginning negotiations

In a comparatively low value claim (i.e., under £5,000) you may want to
negotiate a settlement on your own. In a higher value claim, however, you'll
probably want a solicitor to do it.

If you consult a solicitor, they can only negotiate on your behalf if you
provide informed consent. Moreover, your legal representative cannot agree any
settlement unless you authorise him/her to do so.

Negotiations ordinarily begin with a meeting or telephone call, although
sometimes they can take place entirely in writing. If the defendant is
contesting liability, then ordinarily you should agree with your solicitor that
you will not begin to discuss settlement with the defendant until each side has
disclosed its evidence to the other. You do not want to agree a settlement, only
to find that the defendant's case was much weaker than you thought.

It is important that you and your solicitor go into the initial round of
negotiations with a clear idea as to your objectives. Your main objective will
probably be to get a general feel for the strength of the defendant's case, and
a sense as to whether the defendant is amenable to settlement or is going to dig
in their heels.

In the initial discussion, the defendant will likely want to get some idea of
the total amount you are looking to claim. Your solicitor might give the
defendant some guidance as to what to expect, and provide the defendant with a
general outline of your case (avoiding too much detail, and with an emphasis on
its strengths).

So the initial discussion will be important, and may well set the parameters
for the whole settlement process. You and your solicitor need to be extremely
well prepared for it, and if you're not, you should consider delaying it until
you are.

Separating questions of liability and damages

Sometimes in negotiations (and even in court proceedings) the questions of
the liability of the defendant and the amount of damages (which lawyers call
"quantum") will be split.

If your solicitor believes that you have a good chance of prevailing on the
question of liability, you might want them to ask the defendant for an interim
payment. This can be a good move, as it can provide you with funds to meet costs
you may have incurred and already paid yourself. It also gives you leverage in
negotiations, since the defendant will be aware that if the defendant's position
is weak on liability and they stonewall your request for an interim payment,
then they may be liable for additional costs if you have to ask the court to
order an interim payment.

Part 36 offers to settle

Part 36 offers can form an important part of the negotiation process. "Part
36" refers to a section of the Civil Procedure Rules, which govern the way court
cases are conducted in England and Wales, dealing with offers to settle.

Either party can make a Part 36 offer. If the defendant makes a Part 36 offer
and the claimant does not accept it, the claimant will have to pay a proportion
of the defendant's costs if the amount of compensation ultimately awarded by the
court is less than what the defendant offered. The same is true, in reverse, if
the defendant refuses to accept a Part 36 offer from the claimant. Therefore,
the Part 36 offer can be a useful tool, and the possibility of cost sanctions
means that a party receiving a Part 36 offer generally will have to give it
serious consideration.

Bluster and bullying are not synonymous with tough
negotiation

Solicitors who are tough negotiators usually get better settlements for their
clients. But what does "tough" mean? Although bluster and bullying might
sometimes pass for toughness, more often it signals to the other side that your
case is weak or that you and/or your solicitor are not well prepared.

The tough negotiator has a thorough understanding of their client's
objectives and will be tenacious about achieving them. They are patient, and
sometimes content to leave issues unresolved for a period, allowing a point to
sink in with the other side, or sometimes buying time to confer with you and
come up with additional arguments and support for your position.

The crucial part of toughness, though, is a demonstrated willingness to
follow through and go to trial if necessary. Sometimes lawyers (and/or certain
clients) are reputed to be hesitant to go to trial, and will always eventually
throw in the towel rather than be faced with trial. But a tough negotiator who
is confident in their client's case will be prepared to go to trial if
necessary, and a solicitor who is known for going to trial when necessary (and
winning) will immediately give a claimant a decided advantage in settlement
negotiations.

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